Lawmakers look to fix tax code quirk

LINCOLN – Sen. Sheldon Whitehouse and Rep. David Cicilline are teaming up to reverse what they say is a perverse incentive in the U.S. Tax Code that provides a tax break to companies that move American jobs to other countries.
A bill they call the Offshoring Prevention Act, which Whitehouse introduced in the Senate on Monday and Cicilline introduced in the House of Representatives Tuesday would require business to pay taxes on their overseas operations the same way they would if that work were being done in the United States. Cicilline was at Lincoln’s Tanury Industries Monday to announce the legislation. Whitehouse was scheduled to be there as well, but Cicilline said his colleague injured his back and could not make it.
Tanury is a company that would benefit from the bill if it became law. Currently, the lawmakers say, U.S. companies that manufacture goods abroad for sale here at home are allowed to defer payment of federal income tax – waiting to pay taxes on foreign income in years that minimize their tax liability. They say their legislation would “correct the tax code” and allow manufacturers operating in the U.S. to compete on a level playing field.
“It eliminates benefits that currently are provided to companies that ship American jobs overseas,” Cicilline told a handful of Tanury employees brought to the cafeteria to hear about the legislation. “Under our tax code, they actually get a tax benefit if they take American jobs and ship them overseas; what this legislation does is it undoes that and will create incentives to keep manufacturing jobs here in the United States. “The big multinational corporations doing manufacturing outside the United States, they like the current policy, they can avoid paying taxes on operations outside the United States which enhances their profits; it just costs the United States manufacturing jobs,” the 1st District congressman said. Tanury President and CEO Michael Akkaoui said the company has all of its operations within the United States and it services more than 1,000 U.S. based companies.Akkaoui , boasted that Tanury didn’t lay off a single employee during the recession of the last several years and in fact it added 10 high-paying jobs over that period. “Tanury Industries is an example of a company that has done it right, Akkaoui said. “We compete on quality, technology and service. Legislation such as this is critical to maintaining our position in the global economy,”Cicilline told The Times that taking away the tax break, “further incentivizes companies to keep and grow jobs here in America and, obviously, here in Rhode Island”George Carvalho, a Whitehouse aide, said the additional taxes the bill would collect would reduce the deficit by an estimated $19.5 billion over a 10-year period.“It should be an issue on which we can build bi-partisan support,” Cicilline said, “It’s common sense, it’s good for our country, it’s good for Rhode Island and it’s good districts all over. I think, fundamentally, people understand that if we don’t start making things again in this country and start manufacturing and selling American-made goods all over the world, we are never going to really rebuild the economy of this country.” Cicilline pointed out that manufacturing jobs tend to pay better than non-manufacturing jobs, “so these are jobs with good wages.”In a written statement, Whitehouse said, “I have heard from too many Rhode Island small businesses that are fed up with unfair competition from abroad. By giving special tax deals to companies that ship jobs overseas, we put local small businesses at a disadvantage. Ending this costly tax giveaway will help keep jobs in America and generate nearly $20 billion in new revenue – a true win-win.”Whitehouse first submitted the legislation in 2011.